Are you in the market for a new car? Are you ready to make a purchase, but unsure if you can afford it? Buying a new car can be both enjoyable and stressful at the same time. Even if you feel comfortable with your car budget, there’s always a chance that you could overspend — and a mistake like that could bog you down for years to come.

Rather than worry about overspending on a new car, take the proper steps upfront to avoid trouble. Here are some of things you can do:

1. Review your current car payment

If you currently have a car payment, take a closer look to determine how it fits into your budget. Are you spending too much money? Could you afford more? How many years do you have left to repay your loan?

If you don’t have a car payment, move onto step #2 below. You can also look at how much you’ve paid in the past, giving you an idea of what to expect this time around.

2. Consider your budget as a whole

It’s not good enough to only review your current car payment. You also need to consider your budget as a whole. Are you in a position where you can afford to increase your car payment? Do you need to save money on this expense so that you have funds for more important expenses?

Take as much time as necessary to review every last detail of your budget. This is the only way to make an informed and confident purchase from a financial standpoint. 

3. Think about other car-related expenses

Don’t get so hung up on the cost of a new car that you overlook other expenses. These can include things such as the cost of maintenance and repairs, fuel, and insurance. 

Once you understand the total cost of ownership, it’s more clear as to what fits into your budget. You can collect this information by searching the internet, talking to your salesperson, and contacting your insurance company.

Here’s an old school anecdote that says it all: Don’t buy a Cadillac if you can’t afford the gas. 

Final Thoughts

As a general rule of thumb, it’s better to underspend than overspend on a new car. Even though you may not get everything you want in terms of features, this approach will help you avoid unnecessary stress.

Have you ever overpaid for a car? What did you end up doing? Did this affect your short and long-term financial health?